Is it Okay to Withdraw an Offer on a House in NYC?
Yes, you can withdraw an offer on a house at any time before purchase contracts have been signed. However, you should be very careful about signing any sort of offer letter or form because doing so may enable a counter-party to sue you if you back out of an accepted offer.
When Is It Too Late to Withdraw an Offer?
It becomes too late to withdraw an offer after you have signed a contract of sale and delivered an earnest money check to the seller’s attorney. The seller could counter-sign the contract at any point and deposit your contract deposit into the seller’s attorney’s escrow account.
Generally speaking, once the seller has counter-signed the contract and returned the fully executed contract to the buyer’s attorney, the listing is considered to be in-contract and binding on all parties.
However, please note that some buyers’ attorneys will try to be clever and include language that says the contract will only be considered to be fully executed and binding once the buyer’s attorney has confirmed in writing receipt of a fully executed contract.
If this type of language is agreed upon, then technically the buyer would be the last to act vs the seller, and the buyer could technically still withdraw an offer by instructing his or her attorney to say that they never received the fully signed contract.
We’ll explain in the following section why this is a bad idea, and why you should never sign anything if you don’t intend to follow through in good faith.
Pro Tip: You can increase your negotiating leverage by making an all cash offer instead of an offer which relies on financing. An all cash offer by default contains no contingencies, and as a result the assuredness of execution may enable you to negotiate a price discount.
What If You Signed an Offer Form?
If you signed an offer form or letter of intent, then you have put yourself in a precarious situation and may be sued if you don’t follow through. You should immediately protest to the broker that you have been tricked into signing something that wasn’t necessary to be signed.
For example, in New York offers are generally emailed and are completely non-binding. There is never any need for a buyer or a seller to sign anything when it comes to the offer submission and negotiation process.
However, some brokers do have their own offer submission forms and templates, and you should push back hard should you ever come across such a form that requires your signature. Ask to speak with their principal broker if the listing agent demands that you sign what should be a completely non-binding offer.
You can even warn them about the unauthorized practice of law in some states like New York.
This is serious because even though offers are generally not binding in most states like New York, whether they be written or verbally made, there is legal precedence where courts ruled that offers were indeed binding when signed and when it included common contract language.
As a result, you should never sign any sort of offer form or letter of intent, especially if you want the ability to withdraw your offer before having signed a formal contract of sale.
Pro Tip: In Massachusetts, courts ruled in McCarthy vs Tobin that because both the seller and the buyer had signed a standard offer to purchase form from the local Realtor association which included common contract language, the accepted offer was binding.
Can You Re-Negotiate an Offer?
Yes, you can re-negotiate an offer instead of withdrawing it if you’re still interested in buying the property, but just on different terms. In fact, it’s quite common for buyers to attempt to negotiate after inspection but before signing a contract.
Often times, buyers will lure a sellers into a false sense of security by getting an attractive offer accepted. Then the buyer will hem and haw and take up as much of the seller’s precious marketing timeline as possible. Then, at the last possible moment, the buyer will attempt to re-negotiate the deal.
The buyer will tell the seller that they’re ready to sign the contract ASAP since they’ve finished all of their due diligence, but just need this one concession from the seller. The seller will be frustrated at having wasted all of this time with the buyer, and may actually agree to the concession since the buyer is ready to sign.
Sellers can of course counter-act this strategy by continuing to hold open houses and to show their property until contracts have been fully executed. While it can be tempting to pause showings after you have an accepted offer, it’s critically important not to do so because accepted offers are made of air. The buyer could re-negotiate or withdraw their offer on a house at any time before having signed on the dotted line.
Pro Tip: Should you get a home inspection before making an offer? We’ll explain in this article when it makes sense to pay for and order a home inspection, and why you shouldn’t do it too soon.
Sample Offer Submission Form
Please see below for a sample offer submission form which has been customized by a hypothetical, although typical agent in NYC. As we’ve discussed, it’s completely uncustomary to ask a buyer to sign anything when they are making an offer. However, some overly zealous and clearly inexperienced listing agents may try to get buyers to sign their offer form in a misguided effort to impress their clients.
If you see something like this, where the agent first of all annoyingly asks you to fill out a custom offer form, and secondly when they ask you to sign it, you should run. And if you really like the property, contact the agent’s manager to inform them that the listing agent is attempting to practice law without being a lawyer. Furthermore, it’s unethical for a buyer’s agent to attempt to bind a buyer to something that is customarily non-binding!
Pro Tip: What’s a short sale? Read our article to learn more about how to buy a short sale property, and how the offer submission and negotiation process will differ from that of a regular re-sale.
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Disclosure: Hauseit (https://www.hauseit.com) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).